The Special Investigation Team probing the Ponzi scam perpetrated by IMA, on Friday arrested an Assistant Commissioner of the Bengaluru North sub division and a village accountant for helping IMA founder Mansoor Khan obtain a no objection certificate (NOC) in exchange for a bribe of Rs 4.5 crore.

LC Nagaraj, the Assistant Commissioner and village accountant Manjunath, were arrested for enabling Mansoor Khan to obtain the NOC he needed for a loan. SIT sources say that Nagaraj earlier told the sleuths during investigation that he had tried to take action against Mansoor Khan by issuing him several notices. However, the probe revealed that Nagaraj was allegedly misusing his position and had demanded a bribe of Rs 4.5 crore in exchange for an NOC and a report favouring IMA.

SIT sources say that the state government had appointed Nagaraj as the Competent Authority to probe the tip-off received from Reserve Bank of India that Mansoor Khan and IMA were running fraudulent operations.

Soon after he was appointed the Competent Authority in June 2018, Nagaraj had issued a public notice in newspapers seeking information from the IMA investors regarding irregularities. However, in February 2019, Nagaraj had filed a report and submitted it to the state government stating that Mansoor Khan and IMA were not running fraudulent operations. SIT sources say that Nagaraj allegedly penned down a report in favour of Khan, so that the Revenue Department would have no problem issuing him an NOC.

On Friday, Nagaraj was picked up from the Karnataka High Court. Nagaraj, who was at the court for a case, was picked up by SIT sleuths who said they wanted to question him. Dressed in plainclothes, the sleuths intercepted Nagaraj in the High Court canteen. SIT also raided Nagaraj’s residence.

SIT sleuths also arrested village accountant Manjunath for allegedly helping Nagaraj in the transaction with Mansoor Khan.

“The money was handed over in three instalments of Rs 1.5 crore each. One of the IMA’s employees met with Manjunath at a coffee shop and handed over the money,” an SIT official said.

Nagaraj is the second government official being arrested in the IMA case. Last week, the SIT arrested BDA executive engineer PD Kumar Nayak for allegedly accepting a bribe of Rs 4 crore from Mansoor Khan. PD Nayak had allegedly helped IMA get a clean chit from the Revenue Department after the company came under the RBI’s lens. Nayak had allegedly taken the money from Khan stating that he had to give it to a senior IAS officer, who had previously served as BDA chief.